Contain information about future spot prices

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1. An investment will pay $225 per year (indefinitely), starting in one year’s time. The annual payments will grow at a rate of 3% per year. If the price of this investment is $2,000, what is its rate of return?

2. Do futures prices contain information about future spot prices?

3. What information do we discover when we look at the June18 S&P 500 futures price and the Sept18 S&P 500 futures price? Why?

Reference no: EM132070691

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